By Ioanna Moriatis, feature photo by Ahmad El-Nemr | This is the cover story of the Spring 2018 edition of AUCToday.
Mostafa Kandil ’15 is just 25, and yet is already at the core of a revolutionary trend in Egypt with his new company Swvl, a mobile app that organizes convenient and customized transportation routes around Egypt at reasonable prices. In fact, Swvl — which was accelerated at the AUC Venture Lab — recently raised $8 million in its first round of venture capital financing. This is the largest round of funding for a tech startup in Egypt and one of the largest in the Middle East.
“What we’re doing is building public transportation for emerging markets,” said Kandil, who was named — along with co-founders Mahmoud Nouh and Ahmed Sabbah — among Forbes Middle East’s Class of 2018 Arab 30 under 30. “Often, people outside of emerging markets don’t understand the magnitude of this global issue. In these markets, the middle class doesn’t have affordable ways to commute. We’re going to these markets and building the infrastructure for them.”
In the short amount of time since its founding in 2017, the young startup has seen impressive growth, crossing Egypt’s borders as it begins to establish roots abroad. After just six months, the transportation company was moving thousands of people a day. “Swvl is on its way to becoming a household name in Egypt and one of the biggest job providers in the country,” said Kandil. “We are very excited about what the future holds for us as we build Egypt’s first tech unicorn — a company that investors value at more than $1 billion.”
Companies around the world have tried to tap into this market with little success beyond a limited region. Kandil and his partners have impressed international investors with the rapid and widespread development of Swvl and the start of its expansion outside of Egypt to other emerging markets across the Middle East, Southeast Asia and Africa.
“The impact we’ve seen is incredible,” said Kandil. “Nobody has been able to crack this issue before, and we’re growing out of Egypt very quickly.”
How It All Began
With an innovative mind already cultivated at the age of 16, Kandil started his AUC studies as a petroleum engineering student.
After gaining experience in the field through an internship, he began to think of going down a different path. “Petroleum engineering is a very specialized field,” he explained. “You focus on one tool for years. I get bored easily and need change. I wouldn’t be able to work on only one thing and not feel like I’m creating something new.”
And so, he shifted focus and began to create.
At 19, Kandil was selected as one of 30 participants in a program hosted by Google and was invited to its headquarters in Dublin to network and learn about entrepreneurship. “It was a life-changing experience,” he reflected. “We were 30 people from 25 different countries. Everyone came from a different background and field.”
Equipped with a curious, entrepreneurial mind, Kandil returned to Egypt only to pack his bags and fly out once more — this time to the Philippines. Recruited by the trending company Rocket Internet, Kandil was given the opportunity to build and grow a business based on an already successful business model. “They cherry-pick entrepreneurs, give them budgets and send them to a country to start a business,” he said. “We were supposed to grow the business, scale it and hire replacements after six months to continue sustaining the company’s progress when we leave. It was an amazing experience.”
After six months, Kandil had already grown his online vehicle marketplace, Carmudi, to 40 people and scaled it to three cities. Carmudi was soon the second largest company in the Philippines, coming out on top of three major competitors.
Swvl comes as a cost-friendly and useful alternative for commuters, given the challenges associated with public transportation in Egypt — whether in terms of the reach of the bus and metro network or the lack of a clear system. Through this application, Kandil and his partners have been able to build an entire transportation infrastructure in Egypt, offering a reliable and accessible service that spans across Cairo and even extends outside of the capital.
Users of Swvl input their desired pick-up location and destination, and the application offers a set of routes and times from which to choose. It gives all the essential information: how long the ride will take and the distance needed to walk based on the route. Users are able to pay online so that riding just becomes a matter of pick-up and drop-off.
Swvl’s system of buses sets up routes based on the pick-up and drop-off locations typically requested, offering shared fixed flat rates with no surge pricing. When the application was first introduced in Cairo, the first few routes departed from AUC so that the team could monitor the market and gather data to multiply routes based on consumers’ needs.
Kandil also noted that this application offers an effective relief to the government, privatizing a system of public transportation while maintaining affordable prices and creating opportunities for employment. Since the introduction of the app, Swvl’s fleet has increased to hundreds of buses. Swvl intends to invest $16.9 million, or EGP 300 million, in the Egyptian market in the next three years to employ micro-entrepreneurs. “We want to become one of the biggest job creators in the country,” said Kandil.
AUC: The Springboard
While at AUC, Kandil was a member of the Cairo International Model United Nations, an organization that pushed him to grow as a leader and businessman. “We had to lobby at conferences and get everyone around us to believe in what we were saying,” said Kandil.
“I think this is a unique skill that AUC students, in particular, have. When I graduated, I started doing this. My job is basically selling what we do.”
After graduation, Kandil dabbled in venture capital for some time as an intern, before joining Otlob as its head of operations. Already managing five teams as a fresh graduate, he was able to increase the company’s efficiency by approximately 400 percent.
Continuing down the path of company growth, Kandil then joined Careem as a market launcher, debuting cities in Turkey, Pakistan and Egypt for the transportation service in only six months. His talent was recognized with the CEO’s High Achiever Award.
Having worked in an on-demand transportation company for some time, Kandil began to observe trends in the market, noticing that the average trip fare totaled three or four dollars, which can be a toll for the average Egyptian commuter. “I had a hypothesis that the problem was with the tourism companies,” Kandil said. “I knew that these companies have huge fleets of buses that are high quality, but completely underutilized.”
With his eye on an opening in the market and partners interested in collaborating, Kandil felt ready to leave Careem and begin work on a new project. He and his fellow co-founders Nouh and Sabbah left their job positions, and the next month, were working on Swvl.
Kandil and his team are alumni of the AUC Venture Lab, Egypt’s first University-based incubator, where they participated in cycle eight. AUC Venture Lab offers acceleration programs to high-growth and innovation-driven startups. With the AUC Venture Lab’s entrepreneurial support as well as the knowledge and guidance of mentors, the team was able to launch the application before graduating from the cycle.
“It’s important for entrepreneurs to create new innovation-led startups that act as platforms for increasing competitiveness,” said Ayman Ismail ’95, ’97, the Abdul Latif Jameel Endowed Chair in Entrepreneurship and director of the AUC Venture Lab. “Almost 50 percent of AUC Venture Lab startups receive investments, with the total now exceeding EGP 220 million. We are proud of the Swvl founders, who are definitely changing and revolutionizing the Egyptian transportation sector.”
Venturing into the Unknown
Kandil’s academic background and experience traveling as a student have given him an edge as he looks to continue developing his startup. “It’s been very challenging,” he noted. “We want to keep growing quickly. I was lucky that I got to work with different cultures in various geographic locations when I was younger. It makes it much less scary when we say, ‘OK, let’s go to this country and launch a business there.’”
After overcoming many challenges along the way and creating success out of limited initial resources, Kandil feels confident in his decision to divert from his original career path. He encourages AUC students and graduates to take risks such as this one and innovate.
“As AUC graduates, we have the opportunity to take risks,” said Kandil. “My single advice is: Build something; take a risk. This is what will differentiate you. It’s been very hard taking this leap, but we now dream of seeing Swvl as the first Egyptian tech unicorn. We’re laser-focused on this vision right now.”